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Sep 4, 2020
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The crash of technology stocks dragged the US stocks down by 3.5%. Is this actually a healthy correction?

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The US technology stocks, which just made history in the last week of August and “The market value exceeds the entire European stock market”, were unfortunately hit hard in the first week of September. Yesterday, Apple plummeted 8%, Microsoft plummeted 6%, Google fell 5%, Amazon fell 4.6%, Facebook fell 3.8%, and FAAMG’s market value evaporated a total of US$462 billion.

Affected by the crash of technology stocks, all major U.S. stock indexes closed sharply lower. The S&P 500 plummeted 3.5%, the biggest one-day drop since June. The Nasdaq and Dow also fell sharply, falling 5% and 2.8%, respectively.

As reported by Bihaiqixing, LPL Financial, a well-known American financial broker, reminded on Monday that after a strong August, it is often a weak September, and September is often the worst stock market performance of the year. That month, especially when it coincided with the election year, was that the case?

Holly MacDonald, head of investment at Bessemer Trust in New York, said the sell-off meant that the market had returned to a more normal level to some extent, and given the rise in August, the decline was not entirely unexpected…

According to Steve Massocca, managing director of securities firm Wedbush, the market sell-off can easily be attributed to computerized and algorithmic trading because such trading is very general. There are also rumors in the market that this is related to the US election, but he said it should not be the reason, although the rise in Trump’s poll support this week is seen as a favorable factor for the stock market.

Previously, due to the high level of technology stock trading enthusiasm, many institutional strategists, including Goldman Sachs and Morgan Stanley, have long been worried about the high FOMO sentiment in the market. Ed Keo, chief investment strategist at investment company QMA, said:

 So far, what I have seen is a perfect, natural, and healthy callback in the bull market. In general, everything is becoming impetuous. Some stocks are rising 3%, 4%, 5% every day.

Some analysts believe that the deterioration of international relations and the delay in the introduction of US fiscal stimulus measures have led to a setback in investor confidence. Mohamed El-Erian, Allianz’s chief economic adviser, who predicted that corporate bankruptcy is the biggest risk for a stock market rebound, pointed out that after five consecutive months of gains, the time for US stocks to pull back is ripe. If investors shift from technical considerations to fundamentals, US stocks may fall another 10%.

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